Nigeria’s foreign direct investment (FDI) inward stock experienced a sharp decline, dropping from $86.2 billion in 2022 to $73.4 billion in 2023, largely due to the naira’s devaluation and the exit of multinational corporations. The 49% depreciation of the naira eroded the USD value of foreign holdings despite a 109% increase in FDI inflows to $1.87 billion in 2023. Key multinationals like GlaxoSmithKline, Diageo, and Microsoft exited the Nigerian market, citing challenges such as forex scarcity, macroeconomic instability, and rising operational costs.
Experts link the drop in foreign holdings and company departures to systemic issues, including corruption, security concerns, and inflation, which rose to 33.88% in October 2024. The naira’s 70% depreciation since 2023 further deterred investment, as companies faced losses on capital expenditures. Despite the Tinubu administration’s efforts to attract investors through initiatives like the Presidential Enabling Business Environment Council (PEBEC), the government has yet to address long-term economic policies effectively.
Economic analysts, such as Bismarck Rewane, stress the importance of stabilizing the naira and controlling money supply growth to curb inflation and encourage investment. However, the challenges persist, leaving Nigeria’s $73.4 billion foreign holdings at risk of further decline amid a worsening economic environment and heightened investor uncertainty.
